WASHINGTON — Storied manufacturer Gibson Guitar Corp. will pay $350,000 and improve its import controls in exchange for the government deferring prosecution of environmental crimes, the Department of Justice announced Monday.

The case involved allegations that Gibson, a marquee name for musicians everywhere, illegally imported protected hardwoods from Madagascar and India for use in its products. The Justice Department maintained Gibson was aware that it was purchasing illegally cut endangered woods from Madagascars protected national parks.

In fighting those charges, the companys CEO, Henry Juszkiewicz, became a celebrity in conservative and tea party circles. He took to Fox News and other outlets to accuse the government of overreach. His actions led to efforts, which eventually failed in Congress, to roll back parts of the Lacey Act, a wildlife protection law that dates back to 1900.

But Nashville, Tenn.-based Gibson relented in the end. It agreed to pay a $300,000 penalty and make a $50,000 donation to the National Fish and Wildlife Foundation to promote conservation of protected woods used in making musical instruments.

Gibson has ceased acquisitions of wood species from Madagascar and recognizes its duty under the U.S. Lacey Act to guard against the acquisition of wood of illegal origin by verifying the circumstances of its harvest and export, which is good for American business and American consumers, Assistant Attorney General Ignacia Moreno said in a statement Monday about the settlement, which happened on July 27.

The settlement was a major victory for the Environmental Investigation Agency, a conservation group whose undercover legwork over the past decade brought attention to the massive deforestation in Madagascar that was threatening wildlife and hardwoods.

The groups efforts helped bring about amendments to the Lacey Act that since 2008 have made it illegal to knowingly import wood thats been harvested and exported in violation of the laws of another country. Thats where Gibson ran afoul of the law, becoming the first high-profile prosecution under the upgraded Lacey Act.

For this new law to, for the first time, hold a company to account that was profiting from trading in wood that was illegally cut, was illegally taken from that country, is a great signal that this law can help solve this problem, said Alexander von Bismarck, the groups executive director and the person who carried out the early research into deforestation.

In an interview with McClatchy last year, Juszkiewicz complained that Gibson was being singled out and that the law was so vague that companies could be guilty of crimes they had no intent to commit.

However, the settlement documents released by the Justice Department show that a Gibson wood product specialist traveled to Madagascar in June 2008 with representatives from other guitar makers. These company officials had been told that that the harvest of ebony had been banned since 2006, prohibiting the exportation of unfinished instrument parts

Gibson, the documents show, continued to purchase ebony from Madagascar through a German supplier, Theodor Nagel, for use in fingerboards. Juszkiewicz did not return calls for comment Monday.

As part of Mondays settlement, Gibson agreed to enhance its due-care standards, including severing ties with known violators of illegal shipments; conduct greater audits of its supply chain; and offer training programs for its suppliers.

The Justice Department reserved the right to prosecute Gibson if it feels the company has violated the deferral agreement. Gibson will also withdraw its claims to more than $261,000 worth of Madagascar ebony shipments seized by the U.S. Fish and Wildlife Service from the companys operations in Tennessee.

In a face-saver for Gibson, the Justice Department said it would not take enforcement actions related to future orders and imports of ebony and rosewood fingerboards from India until the government of that nation provides specific clarification about how these products are classified for export.

Justice officials have maintained that India disallowed the export of these products, but Indian trade officials say otherwise. In criticizing the case, Gibson contended that it was being accused of violating a foreign law that the foreign country said had not been violated, a no-win proposition.

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